Here's how you can make big money from small stock investments

Many people want to earn good profits from the stock markets based on the small investments in the market. There are two possible ways for this. The first way is that the stock that we own appreciates or increases in the value over the period of time. That is the people who are acting as buyers are ready to pay for the share a price more than the price we owned. The reason for this can be that the company is performing well and there are positive sentiments about the company among the people. Thus if we are holding a stock who has gained value we have got what is known as unrealized gains. We can lock in the gains only by selling the stocks. Since the market prices fluctuate constantly the gains can only be realized and can be locked only when we sell the stocks and get the amount in our bank account.

The second way of earning from the stocks is to earn through the dividend issued by the company. This is the payout that the company sometimes issues to the shareholders.

Dividend

A dividend is the regular payout that companies make to its stake holders based on the company’s earnings. Irrespective of the stock price of the company the dividend gives stock holders a steady return. In the present scenario older and well established companies pay dividend and small companies do not pay the dividend. The dividends are generally paid quarterly (every three months) by companies.

To earn good profits from the stock market the investor should reinvest the amount received as dividend. This will multiply the income invested in the stocks. The investment plans can be taken as dividend reinvestment plan (DRIP) which makes the reinvestment automatically.